Ohio’s Sales Tax Holiday Returns August 1–14: What Dealerships Need to Know
Ohio’s popular Sales Tax Holiday is back for 2025, running from Friday, August 1 at midnight through Thursday, August 14 at 11:59 p.m.
While it started in 2015 as a way to ease back-to-school shopping costs, the holiday has expanded over the years—and yes, it now impacts auto dealerships, service departments, and parts counters.
So, what does this two-week window mean for your dealership? Let’s break it down.
What Qualifies for Tax Exemption?
During the holiday, all tangible personal property priced at $500 or less is tax-free, except for:
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Motor vehicles
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Alcohol, tobacco, vapor products, or marijuana-related items
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Watercraft and titled outboard motors
For dealerships, tangible personal property is basically anything you can see, touch, weigh, or measure—so think:
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Tires
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Batteries
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Filters & oil
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Bolts, screws, seat covers, headlights
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Detailing products, rags, and cleaning supplies
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Even branded dealership swag
The big takeaway:
✅ If it’s a part or product under $500 and separately listed on the invoice, it qualifies as tax-exempt during the holiday.
The Fine Print for Repair Orders
Here’s where things get tricky. Whether a service ticket is itemized or bundled affects how the tax holiday applies.
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Itemized Repair Orders
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Parts $500 or less: Both the part and the labor to install it are tax-free.
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Parts over $500: Both the part and the associated labor are taxable, even if the labor itself is less than $500.
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Mixed Pricing Scenarios
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If some parts are under $500 but one part is over $500 and you can’t separate the labor tied to the taxable item, the entire labor charge becomes taxable.
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The under-$500 parts remain tax-exempt.
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Non-Itemized Repair Orders
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If you bundle parts + labor into one price (e.g., an oil change), the entire order is taxable, even if it totals less than $500.
Can Dealerships Opt Out?
Unfortunately, no.
Ohio law requires all retailers, including dealerships, to comply with the holiday. And since the auto industry collects nearly $1 of every $5 in Ohio sales tax, dealerships are frequently audited.
That means it’s crucial to get this right.
Why This Matters for Dealerships
The expanded sales tax holiday has caused confusion in the past—especially for service departments. Incorrectly applying exemptions can lead to:
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Costly audit penalties
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Frustrated customers if charges don’t match their expectations
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Extra administrative headaches for your accounting team
Taking time now to prep your staff and service advisors will save stress during the two-week rush.
How to Prepare
✅ Train your service & parts staff on the rules—especially itemizing invoices properly.
✅ Update your repair order templates in your DMS to ensure parts & labor are clearly separated.
✅ Review your pricing on common parts to see which qualify.
✅ Communicate with customers ahead of time so they know what’s eligible.
Need More Guidance?
The Ohio Automobile Dealers Association (OADA) has prepared helpful tools to make compliance easier, including:
